Outlook and Economic Forecast - PATA...

2017 PATA-TTRA Forum

Outlook and Economic Forecast

February 2, 2017

HOSPITALITY ADVISORS LLC

Year of the Rooster!

Pres. Trump Rooster, Taiyuan, Shanxi Provence , China

Master Tsai’s Rooster Predictions

Master Tsai’s Donald Trump Chinese Horoscope

Alec Baldwin will continue to

impersonate Pres. Trump on SNL

Unbalanced elements, no Metal,

strong on Earth and Fire

Pressure from Metal to produce

“Bromance” ends, Putin Dragon

and Trump Fire Dog incompatible

Water weakens 2nd half 2017-18,

Water flows in 2019-2020

Trump re-elected

Hospitality Advisors LLC

2016 Selected Global Hotel Markets

4

Occ % ADR RevPAR

2016 2015 2016 2015 2016 2015

United States 65.5% 65.4% 124$ 120$ 81$ 79$ Hawaii 79.2% 78.7% 255$ 245$ 202$ 193$

Caribbean 66.7% 68.3% 201$ 202$ 134$ 138$

Brazil 52.9% 56.7% 91$ 89$ 48$ 50$ Australia 75.7% 75.0% 137$ 136$ 104$ 102$ China 66.3% 64.8% 80$ 87$ 53$ 56$ Singapore 81.0% 82.5% 203$ 209$ 165$ 172$ Thailand 75.4% 73.5% 102.49$ 104.50$ 77.32$ 76.81$

Source: STR Inc.


Hawai‘i Snapshot Through 2016

5

Source: Hawai‘i Tourism Authority, STR Inc., Hospitality Advisors LLC

Visitor Arrivals 8.8 million 3.1%

Visitor Expenditures $15.6 billion 4.2%

Hotel Occupancy 79.2% 0.5%

ADR $255 4.1%

RevPAR $202 4.8%

Room Revenue $3.9 billion 5.7%

Total Hotel Revenue $5.7 billion 5.7%Note: Occupancy change is percentage point change.


U.S. West Snapshot Through 2016

6

Source: Hawai‘i Tourism Authority

Hawai‘i Visitor Arrivals 3.7 million 4.3%

% Repeat 81.0% -0.2%

Number of Trips 7.0 -0.6%

Length of Stay 9.16 -1.4%

Daily Spending $167 3.2%

% Hotel Use 43.0% 5.7%

Competing Destinations Mexico, Las Vegas,

West Coast, Canada


U.S. East Snapshot Through 2016

7


Occ % ADR RevPAR

2016 2015 2016 2015 2016 2015

United States 65.5% 65.4% 124$ 120$ 81$ 79$ Hawaii 79.2% 78.7% 255$ 245$ 202$ 193$

Caribbean 66.7% 68.3% 201$ 202$ 134$ 138$

Brazil 52.9% 56.7% 91$ 89$ 48$ 50$ Australia 75.7% 75.0% 137$ 136$ 104$ 102$ China 66.3% 64.8% 80$ 87$ 53$ 56$ Singapore 81.0% 82.5% 203$ 209$ 165$ 172$ Thailand 75.4% 73.5% 102$ 105$ 77$ 77$


Japan Snapshot Through 2016

8


Hawai‘i Visitor Arrivals 1.5 million 0.4%

% Repeat 61.7% 1.1%

Number of Trips 4.1 1.1%


Daily Spending $241 1.9%

% Hotel Use 82.1% 0.5%

Competing Destinations Thailand, SE Asia,

U.S. Mainland


Canada Snapshot Through 2016

9


Hawai‘i Visitor Arrivals 479k -6.5%

% Repeat 65.9% -0.3%

Number of Trips 4.1 -0.4%


Daily Spending $159 -1.8%

% Hotel Use 34.2% -2.3%

Competing Destinations Caribbean, West

Coast, Mexico, Gulf


Average Daily Visitor Census vs. Nightly Hotel Use 2016

10

Source: Hawai‘i Tourism Authority, Hospitality Advisors LLC

Average

Daily Census % Mix

Daily Hotel

Demand % Mix

U.S. West 91,500 41.9% 39,300 33.4%

U.S. East 52,200 23.9% 25,900 22.0%

Japan 23,800 10.9% 19,600 16.6%

Canada 16,500 7.6% 5,600 4.8%

All Others 34,200 15.7% 27,300 23.2%

Total 218,200 100% 117,800 100%


Hotel Occupancy by Island 2016

11

Source: STR Inc., Hospitality Advisors LLC

2016 % Pt. Chg 2015 % Pt. Chg

O‘ahu 84.2% -0.9% 85.1% 0.8%

Maui 75.9% 1.6% 74.3% 1.9%

Kaua‘i 72.6% 1.5% 71.1% 1.1%

Big Island 68.8% 3.1% 65.7% 5.4%

Statewide 79.2% 0.5% 78.7% 1.7%


Hotel ADR by Island 2016

12


2016 % Chg 2015 % Chg

O‘ahu $228 3.6% $220 3.0%

Maui $332 4.3% $318 7.4%

Kaua‘i $254 4.7% $243 2.5%

Big Island $242 4.4% $232 0.3%

Statewide $255 4.1% $245 4.0%


Hotel RevPAR by Island 2016

13


2016 % Chg 2015 % Chg

O‘ahu $192 2.5% $187 4.0%

Maui $252 6.6% $236 10.2%

Kaua‘i $184 6.9% $172 4.0%

Big Island $167 9.3% $153 9.3%

Statewide $202 4.8% $193 6.3%


Hotel Performance by Class 2016

14


Occ % Pt. Chg ADR % Chg RevPAR % Chg

Luxury 74% 0.5% $506 1.8% $373 2.4%

Upper Upscale 86% 1.4% $260 3.8% $223 5.6%

Upscale 74% 0.5% $191 3.2% $141 3.9%

Upper Midscale 80% -0.8% $150 3.9% $121 2.8%

Economy 75% 2.3% $141 8.0% $106 11.3%


Luxury Hotel Market by Island

15


2013 2014 2015 2016

O‘ahu Luxury 72.9% 78.3% 77.9% 72.0%

Maui Luxury 69.0% 66.9% 71.4% 75.0%

Hawai‘i-Kaua‘i Luxury 66.9% 70.0% 71.5% 73.8%

Statewide Luxury 69.6% 71.0% 73.2% 73.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100% Occupancy


Luxury Hotel Market by Island

16


2013 2014 2015 2016

O‘ahu Luxury $398 $438 $451 $465

Maui Luxury $520 $534 $572 $583

Hawai‘i-Kaua‘i Luxury $418 $438 $452 $451

Statewide Luxury $446 $476 $498 $506

-$50

$50

$150

$250

$350

$450

$550

$650 Average Daily Rates


Hawai‘i Luxury Resort Regions

17


2013 2014 2015 2016

Wailea 74.1% 75.3% 75.3% 79.8%

Kohala 62.6% 65.4% 67.1% 70.7%

Lahaina/Kā‘anapali /Kapalua 72.2% 73.8% 76.0% 76.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100% Occupancy


Hawai‘i Luxury Resort Regions

18


2013 2014 2015 2016

Wailea $432 $443 $469 $487

Kohala $305 $314 $318 $332

Lahaina/Kā‘anapali /Kapalua $254 $254 $271 $279

$0

$100

$200

$300

$400

$500

Average Daily Rates


19

Distressed Hotel Sales

1992-2005+

Japanese Divestment/US Buyers

3rd Cycle Investment

2018-2024

PK/Moana, Other $3B

2nd Cycle Investment $3.5B+

2012-2017+

Substantial Expansion of Private Equity

Japan Bubble Acquisitions

1982-1991

1st Phase $3.5B Investment

2002-2009

REITS/Public Equity/SPEs/Seasoned Owners

Current Market

2016 However, 2.5B+ in Pipeline

Great Recession

2008-2012

US Divestment/ Japanese Buyers

Waikīkī Acquisition, Renovation and Redevelopment Cycle

Source: Hospitality Advisors LLC


RevPAR Composition Analysis

20


Year Occ ADR RevPAR Occ ADR

2010 70.5% $175 $123

% D 5.8% -1.6% 7.1%

2011 73.3% $193 $141

% D 2.8% 10.4% 14.8% -21.2% 121.2%

2012 77.2% $207 $160

% D 3.8% 7.6% 13.2%

2013 76.5% $228 $174

% D -0.7% 9.9% 9.0% -16.0% 116.0%

2014 77.0% $235 $181

% D 0.5% 3.2% 3.8% -4.8% 104.8%

2015 78.7% $245 $193

% D 1.7% 4.0% 6.3% -3.9% 103.9%

2016 79.2% $255 $202

% D 0.5% 4.1% 4.8% 27.2% 72.8%Note: Occupancy change is percentage point change.

45.5% 54.5%

% Composition

121.9% -21.9%


Seasonally Adjusted % Change Demand, ADR, RevPAR 2012 – 2016

21


-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Jan-1

2F

eb-1

2M

ar-1

2A

pr-

12

May

-12

Jun-1

2Ju

l-12

Au

g-1

2S

ep-1

2O

ct-

12

No

v-1

2D

ec-

12

Jan-1

3F

eb-1

3M

ar-1

3A

pr-

13

May

-13

Jun-1

3Ju

l-13

Au

g-1

3S

ep-1

3O

ct-

13

No

v-1

3D

ec-

13

Jan-1

4F

eb-1

4M

ar-1

4A

pr-

14

May

-14

Jun-1

4Ju

l-14

Au

g-1

4S

ep-1

4O

ct-

14

No

v-1

4D

ec-

14

Jan-1

5F

eb-1

5M

ar-1

5A

pr-

15

May

-15

Jun-1

5Ju

l-15

Au

g-1

5S

ep-1

5O

ct-

15

No

v-1

5D

ec-

15

Jan-1

6F

eb-1

6M

ar-1

6A

pr-

16

May

-16

Jun-1

6Ju

l-16

Au

g-1

6S

ep-1

6O

ct-

16

No

v-1

6D

ec-

16

Room Demand 12-MMA % Chg ADR 12-MMA % Chg RevPAR 12-MMA % Chg

ADR %

Inflection

RevPAR %

Room Demand %

Inflection


ADR Compression/Dispersion

22


ADR Spread % Change

2016 $365 -0.4%

2015 $366 1.1%

2014 $363 6.6%

2013 $340 2.0%

*2012 $333 4.6%

2011 $173 5.4%

2010 $164 -0.7%

2009 $165 -14.5%

2008 $193 0.6%

2007 $192 12.8%

2006 $170 -1.1%* Change in Methodology


Statewide Accommodations Supply

23


Growth In Alt. Accommodations Demand

24

2010 2011 2012 2013 2014 2015YTD Sept

2016

TotalVisitors Alt.Accomm. 382,198 440,013 510,200 572,469 749,088 847,812 817,952

% of Total Visitors 5.5% 6.1% 6.5% 7.2% 9.1% 9.9% 12.3%

% Segment Growth 19.6% 15.1% 16.0% 12.2% 30.9% 13.2% 10.9%

% Vis. Arrival Growth 8.8% 3.7% 9.7% 1.7% 2.4% 4.5% 2.9%


Hawai’i Hotel Industry Outlook

Continuation of hotel industry records, over $1 Billion in hotel

revenues for Summer 2016

2016”Pleasant Surprise,” but signs of market shift evident since

mid-2015

Continued product shift throughout the State

• New hotel investment/evaluation along Kapiolani Corridor to

Downtown

• China Oceanwide/Ko Olina $1.5+ Billion

• Limited service and timeshare resorts throughout State

25


26

Distressed Hotel Sales

1992-2005+

Japanese Divestment/US Buyers

3rd Cycle Investment

2018-2024

PK/Mandarin, Other $3B

2nd Cycle Investment $3.5B+

2012-2017+

Substantial Expansion of Private Equity

Japan Bubble Acquisitions

1982-1991

1st Phase $3.5B Investment

2002-2009

REITS/Public Equity/SPEs/Seasoned Owners

Current Market

2016 However, 2.5B+ in Pipeline

Great Recession

2008-2012

US Divestment/ Japanese Buyers

Waikīkī Acquisition, Renovation and Redevelopment Cycle



Hawaii Hotel Investment Cycle Continues its Epic Pace Into Sixth Year

Outrigger Hotels & Resorts sale to KSL

Marriott acquisition of Starwood

Ko Olina finally reaching its much-needed critical mass and scale with

China Oceanwide’s development, brining diversity in product and brands

Mirae Asset’s $1 billion acquisition of Hyatt Waikiki and Fairmont Orchid

Planning underway for major renovation at the Kahala Hotel

Development of mixed-use Mandarin Oriental Hotel across HCC

Acquisitions, renovations and new development occurring on all major

islands for all asset classes

Other major deals still in the works

27


State of Hawai‘i Occupancy Forecast

Occupancy 2015 2016 2017F

Statewide 78.7% 79.2% 81.0%

O‘ahu 85.1% 84.2% 84.0%

Maui 74.3% 75.9% 76.8%

Kaua‘i 71.1% 72.6% 73.5%

Big Island 65.7% 68.8% 70.8%

28



State of Hawai‘i ADR Forecast

29


ADR 2015 2016 2017F

Statewide $245 $255 $265

O‘ahu $220 $228 $233

Maui $318 $332 $348

Kaua‘i $243 $254 $267

Big Island $232 $242 $254

Thank you!

HOSPITALITY ADVISORS LLC

Outlook and Economic Forecast - PATA...

Documents

Transcript of Outlook and Economic Forecast - PATA...